Assessing competition impacts

Competition assessments in regulatory impact statements

Regulation sets the rules to allow markets to work better. However, poorly designed regulation can have the opposite effect, and can detrimentally affect competition and innovation.

We provide advice on the impacts of government policies and proposed regulation on competition and consumers. As a general rule:

• any restrictions on competition in regulation should be the minimum necessary to achieve the public interest objectives
• the public benefits of that regulation should materially outweigh the competition detriments.

Commerce Commission’s competition assessment guidelines

The Commerce Commission, with support from MBIE, has developed a set of Competition Assessment Guidelines to help public sector officials take competition into account when developing policy initiatives.

The Guidelines set out 4 ways that competition may be impacted by a proposal to determine whether a competition assessment is required. Policy practitioners should ask if the proposal impacts on:

1. the ability of new businesses to enter a market or for existing businesses to expand or exit from a market?
2. the ability and incentive for existing businesses to compete with each other?
3. consumer choice for goods and services or consumers ability to switch between suppliers?
4. existing or potential competitors in a way that is not competitively neutral?   

The guidelines set out 5 steps public sector officials are encouraged to follow when determining whether restrictions on competition are necessary to achieve the policy goal.

The full set of guidelines, and a quick two-page guide, are available below:

OECD guide for policy makers

The Organisation for Economic Co-operation and Development (OECD) has prepared a guide to assist policy makers to take into account the competition impacts of proposed regulation. This can be accessed on their website.

OECD website — Competition Assessment Toolkit(external link)

Occupational regulation

The aim of regulating occupations is to protect the public from the risks of an occupation being carried out incompetently or recklessly.

If you’re developing policy or regulation in this area, we recommend that you follow the policy framework in the Cabinet circular below and consult with us.

Department of the Prime Minister and Cabinet (DPMC) website — Policy framework for occupational regulation(external link)